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#5 Action on demolition of 903 McKinley (File Res. #2010-737 & direction on 203 Linn NEIGHBORHOOD SERVICES MEMORANDUM October 4, 2010 TO: City Council FROM: Jennifer Petruzzello, Neighborhood Services Director SUBJECT: Action on a Proposed Resolution Authorizing the Disposition of Tax Foreclosed Property located at 903 McKinley Street (File Resolution #2010-737) and Direction to Staff regarding Tax Foreclosed Property located at 203 Linn Street Summary Last year, the City Council approved the purchase of property located at 903 McKinley Street under the Rock County Tax Foreclosure Program at a price of $8,221.95 for the purpose of rehabilitating and reselling the property. It has been determined that rehabilitation costs significantly exceed original estimates, and staff is seeking Council approval to demolish the structure at this time. The vacant lot would then be maintained by the City until such time as it is feasible to redevelop the lot with a residential structure that is sensitive to the architecture of the neighborhood. In addition, staff is seeking the Council’s direction regarding tax foreclosed property located at 203 Linn Street. This property was purchased under the Rock County Tax Foreclosure Program for $4,719 for the purpose of rehabilitating and reselling the property. Again, rehabilitation costs are expected to exceed original estimates. Staff is seeking Council’s approval to seek private proposals regarding the rehabilitation of the property (in exchange the City would donate the property), and explore the construction of a new home that would replicate many of the historic features of this property. Department Recommendation Staff is recommending that the City Council approve the demolition of the residential structure located at 903 McKinley Street and the maintenance of this lot until such time as it is redeveloped. Specifically, the Plan Commission and the Neighborhood Services Department recommend that the City Council support a motion to approve Resolution 2010-737 authorizing the demolition of improvements upon real property located at 903 McKinley Street. In addition, staff is recommending that the City Council authorize staff to seek proposals for the private rehabilitation of the property located at 203 Linn Street and obtain estimates regarding the construction of a new home that would replicate many of the historic features of this property. 1 City Manager Recommendation Both the Neighborhood Services Director and City Manager would like to attempt to rehab the Linn Street property. Unfortunately, cost estimates to rehab the property are coming in at high costs similar to the High Street project. One alternative that the Neighborhood Services Director has come up with is to seek proposals for private rehabilitation of the 203 Linn Street property. I am supportive of this approach. Suggested Motion I move to approve file resolution 2010-737 authorizing the demolition of improvements upon real property located at 903 McKinley Street, as part of the City’s neighborhood improvement efforts. I move to direct staff to seek proposals for the private rehabilitation of the residential property located at 203 Linn Street and obtain estimates for the construction of a new home that would replicate many of the historic features of this property. Background Last year, the City Council authorized the purchase of three residential properties under the Rock County Tax Foreclosure Program for blight elimination or rehabilitation purposes. Under State Statutes, the City acquired these properties for a price equal to the delinquent taxes, special assessments and charges, interest, and closing costs. The City’s portion of these charges was returned to the City. The three properties were purchased for a total price of $19,764.17, with $3,797.01 returned to the City for a net cost of $15,967.16. Purchasing these properties under the Tax Foreclosure Program was consistent with the City of Janesville Comprehensive Plan, the Look West and Old Fourth Ward Neighborhood Revitalization Plan and recent City efforts to invest in the improvement of our historic central city neighborhoods. Purchasing these properties allows the City the opportunity to revitalize neighborhoods that have experienced decline, increase the percentage of owner-occupied housing in the area, and eliminate blight. The greatest potential disadvantage or risk to acquiring the properties through tax foreclosure was the uncertainty regarding the rehabilitation costs due to the City’s inability to inspect the interior of these properties before acquisition. At the time of approval, staff indicated we would bring the property back to the Plan Commission and City Council for possible demolition if costs to rehabilitate were found to be cost prohibitive. Funding for the purchase and planned rehabilitation of the properties at 903 McKinley and 203 Linn was provided through Tax Increment Financing. The Project Plan for TIF 33 includes $250,000 for neighborhood housing improvement efforts and includes provisions to provide low interest and/or forgivable loans to residential property owners to help revitalize and stabilize the residential neighborhoods. Additionally funds are included to acquire and remove 2 blighted properties to provide sites for architecturally sensitive infill redevelopment. TIF funds may not be used to demolish structures listed on the national historic register of historic places. The properties located at 903 McKinely and 203 Linn are specifically mentioned as contributing structures th within the 4 Ward Historic District. The property at 903 McKinley Street was purchased for rehabilitation purposes at a price of $8,221.95 (net cost $7,477). This property is a single family, rental property that was built in approximately 1880 and is zoned R3- General Residence. The 1,700 square foot, 1 ¾-story property has 3 bedrooms and one bath. This property is a c. 1855 Greek Revival home, and is a contributing th structure in the 4 Ward Historic District. The property is listed on assessor’s records as being in poor to average condition. Based upon an exterior inspection, it was originally believed that rehabilitation would be extensive and was therefore estimated at $90,000. Since this was a tax foreclosed property, the City was not able to view the interior of the property prior to purchase. Upon acquiring the property and completing an internal rehabilitation evaluation, significant structural issues were identified including: foundation cracks, exterior brick failure, roof damage, fire damage, electrical concerns, and HVAC concerns. In addition all flooring, walls, cabinets, and fixtures are damaged beyond repair and would require full replacement. No historical features remain in the property’s interior. Rehabilitation costs are now estimated to be a minimum of $200,000. Funding for the acquisition and demolition of the property located at 903 McKinley Street is proposed to come from note issue funding allocated for neighborhood and downtown property acquisitions. Five hundred Thousand dollars ($500,000) was included within the 2009 Note Issue, and approximately $300,000 remains to be allocated for specific projects. The demolition costs are estimated at $8,500 and annual maintenance costs are estimated at $720 per year. If demolished, staff will offer Habitat for Humanity an opportunity to salvage any items from the property and will seek bids for the demolition of the structure. After demolition, the City will maintain the lot as a vacant lot, until such time as it is feasible to redevelop the lot with a residential structure that is sensitive to the architecture of the neighborhood. The property at 203 Linn Street was purchased for rehabilitation purposes at a price of $4,719 (net cost $3,954). This property is a single family, rental property that was built in approximately 1910 and is zoned R2-Limited General Residence. The 1,548 square foot, two-story property has 3 bedrooms and one bath. In addition, there is a 400 sf detached garage. This property is a c. 1855 Greek Revival home, which is listed in the National Register of Historic Places as th a contributing structure within the 4 Ward Historic District. The property is listed on assessor’s records as being in poor condition. Based upon an exterior inspection, it was originally believed that rehabilitation would be extensive and was therefore estimated at $90,000. Since this was a tax foreclosed property, the City was not able to view the interior of the property prior to purchase. Upon 3 acquiring the property and completing an internal rehabilitation evaluation, significant structural issues were identified including: foundation cracks, exterior brick failure, roof damage, fire damage, electrical concerns, and HVAC concerns. In addition all flooring, walls, cabinets, and fixtures are damaged beyond repair and would require full replacement. Some historical features remain in the property’s interior (i.e. trim, built in cabinets, windows original size). Rehabilitation estimates vary widely but are believed to be extensive. Staff is seeking Council’s authorization to seek proposals from private contractors for the rehabilitation of the structure located at 203 Linn. Under this scenario, staff would propose that the property be donated to a private individual who would enter into an agreement to rehabilitate the structure, to maintain the exterior historic character of the building, to meet federal minimum housing quality standards, and to maintain or sell the property with a deed restriction to be owner-occupied. If satisfactory and acceptable proposals are not received, staff would recommend obtaining cost estimates for the construction of a new home that would replicate many of the historic components of the existing structure. Analysis A. The project is consistent with the City of Janesville Look West & Old Forth Ward Neighborhood Revitalization Plan, as well as the City of Janesville Comprehensive Plan. These plans call for the revitalization of neighborhoods that have experienced decline, including the Historic Fourth Ward Neighborhoods. The plans also direct the City to acquire vacant, dilapidated, and tax-delinquent properties for rehabilitation and resale to increase owner-occupancy in target neighborhood areas. This would involve the preservation of historically significant properties where possible. Given the high rehabilitation costs, demolition of the blighted structures, and/or construction of a new home that replicates historic features of the home is consistent with the goals of City plans as well. B. It is unlikely that there is sufficient funding within TIF 33 to rehabilitate both residential structures. C. Both homes are similar in exterior historic quality (Both Greek Revivals from the same time period), however, there are no remaining historic features in the interior of 903 McKinley St. D. Funding for the demolition of 903 McKinley Street is available through the 2009 note issue for neighborhood property acquisitions. If demolition is not approved at this time, roof repair should be undertaken immediately to avoid additional property damage. E. Seeking proposals for the private rehabilitation of 203 Linn Street may allow the structure to be rehabilitated while minimizing the risk of high redevelopment costs to taxpayers. Redevelopment of the structure is ideal if an individual can be located with the interest and financial means to do so, and if the City’s financial risks can be minimized. 4 F. In the event that satisfactory and acceptable proposals are not received, obtaining estimates of new construction would allow the City to better evaluate the value of preserving the original structure. If new construction is ultimately pursued, it may allow the City to provide a positive example of infill development that is sensitive to the neighborhood’s character. G. The Plan Commission reviewed the proposed demolition of the property at 903 McKinley Street and unanimously agreed to forward this item to the City Council with a favorable recommendation noting the Plan Commission has not reviewed the financial aspects of this transaction. Attachments: Location Map Photographs of Properties GVS Information Sheet cc: Eric Levitt, City Manager Jay Winzenz, Assistant City Manager/ Director of Administrative Services 5 RESOLUTION NO. 2010-737 RESOLUTION AUTHORIZING THE DEMOLITION OF IMPROVEMENTS LOCATED UPON REAL PROPERTY LOCATED AT 903 MCKINLEY STREET WHEREAS , Wis. Stats. §§62.22 (1), 62.23 (17) (a), 62.23 (17) (b), 66.0101, 62.11(5) and Chapter 32 and other pertinent Wisconsin Statutes permit the City’s acquisition, development, ownership, protection, conservation, and subsequent changes in use and disposition of surplus parkland, open space, riverfront properties, development properties, and other public properties; and WHEREAS, on September 28, 2009, the Janesville Common Council approved File Resolution No. 2009-638 authorizing the acquisition of real property located at 903 McKinley Street utilizing TIF 33 increment for the purpose of rehabilitation and resale; WHEREAS , the City of Janesville acquired the property at a price of Eight Thousand Two Hundred Twenty One and 95/100 Dollars ($8,221.95); and WHEREAS , the rehabilitation cost are estimated at Two Hundred Thousand Dollars ($200,000), which is One Hundred Ten Thousand Dollars ($110,000) more than originally estimated; and WHEREAS, it has been determined that rehabilitation is no longer feasible based on cost; and WHEREAS, the City of Janesville intends to demolish the structure at 903 McKinley Street and maintain the lot for future redevelopment purposes; and WHEREAS , the City of Janesville Comprehensive Plan calls for the revitalization of neighborhoods that have experienced decline, and recommends that the City acquire vacant, dilapidated, and tax-delinquent properties for rehabilitation, resale, and/or demolition in order to increase owner-occupancy or enhance the health, safety, and good order in target neighborhood areas; and WHEREAS , the Janesville Plan Commission has reviewed this proposed disposition on October 4, 2010 and found it to be consistent with long range City plans, but not commenting upon the financial aspects of the transaction; and WHEREAS , the Common Council approved Five Hundred Thousand Dollars ($500,000) in the 2009 Note issue for neighborhood and downtown property acquisitions; and WHEREAS , the funding source for the acquisition and demolition of 903 McKinley Street is the 2009 Note Issue; and WHEREAS , The Common Council hereby find that this disposition is in the best interest of the City and of benefit to the taxpayers and community. NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Janesville that they hereby approve and authorize the City Manager and/or his designee(s) to acquire and close upon the City’s purchase of the Properties described above from the owners on behalf of the City in the manner and for the amounts set forth in the above recitals and to raze and remove the house and other structures and improvements thereon so as to create vacant lot for potential future disposition; and BE IT FURTHER RESOLVED , that the City Manager and/or his designee(s) on behalf of the City of Janesville is/are hereby authorized and empowered to negotiate, draft, modify, review, execute, and enter into additional agreements, record, file and/or make minor modifications and/or amendments to any and all documents, papers, forms, and agreements, and to take whatever other actions as the City Manager and/or his designee(s) may determine, from time to time and at any time, necessary and/or desirable to effectuate the intent of this resolution and/or the public good. ADOPTED: Motion by: Second by: APPROVED: Councilmember Aye Nay Pass Absent Brunner McDonald Eric J. Levitt, City Manager Perrotto Rashkin ATTEST: Steeber Truman Voskuil Jean Ann Wulf, City Clerk-Treasurer APPROVED AS TO FORM: City Attorney Proposed by: Neighborhood Services Department Prepared by: Neighborhood Services Director and City Attorney Shared/resolution 2010-737 – Tax Foreclosure Disposition 903 McKinley.doc ÓÝÕ×ÒÔÛÇ ÍÌ çðí É ÊßÒÞËÎÛÒ ÍÌ îðí É ØÑÔÓÛÍ ÍÌ q Ô»¹»²¼ ÍËÞÖÛÝÌ ÐÎÑÐÛÎÌ×ÛÍ Ü¿¬»æ ïðñìñïð ͽ¿´»æ ïþã ïëðù Ó¿° ݱ±®¼·²¿¬»æ Ôóïì ÔÑÝßÌ×ÑÒ ÓßÐ Ý×ÌÇ ÑÚ ÖßÒÛÍÊ×ÔÔÛ ÓßÐ ï çðí ÓÝÕ×ÒÔÛÇ ÍÌ ú îðí Ô×ÒÒ ÍÌ ÐÔßÒÒ×ÒÙ ÍÛÎÊ×ÝÛÍ ÍæЮ±¶»½¬­Äд¿²²·²¹ÄÝ¿­»­ÄÝ¿­»­óîðïðÄÔóïìÁß½¯«·­¬·±²­ 903 McKinley Street 903 McKinley Street